Delay and Disruption - The Dynamic Role of the Programme

© Daniel Atkinson 2001 22 November 2001

 

Meaning of Programme
Type of Programme
Role of Programme
Obligations as to Programme
Programme as a Contract Document
SubContractors and the Main Contract Programme
Standard Forms

 

SUMMARY
There are two main roles for programmes in the management of projects, the Monitor Role and the Dynamic Role.  Five functions of programmes can be identified, three fulfilling the Monitor Role and two the Dynamic Role.  The role assigned by the contract and the particular terms will define which of the five function programmes is required.  The Dynamic Role and the two functions of the Management Programme and Compensation Programme are described in this Article.

  4.   The Management Programme is a model of predicted progress which can be analysed to assist in the management of the project.  Usually a network analysis is used.  The programme allows the priority of actions to be established based on critical path analysis and float trends.
  5.   The Compensation Programme allows compensation to be assessed, or allows the circumstances to be identified necessary for the exercise of certain rights.

 

The Dynamic Role of the Programme

A programme will allow the performance of time related obligations to be monitored.  The function of the programme will depend upon the terms of the contract, although frequently the parties adopt a programme for practical common sense reasons to manage the project, despite the absence of a contractual requirement.  The three functions of a programme used for monitoring are given below and described in the Article Monitor Role:

  1. Monitor Role
    1. Milestone Programme
    2. Progress Programme
    3. Prediction Programme

The Dynamic Role of the programme is described in this Article Dynamic Role and includes an additional two functions as follows:

  1. Dynamic Role
    1. Management Programme
    2. Compensation Programme

Function 4 Management Programme

The fourth possible function of the programme is to provide a model for analysis and implementation of corrective action. The action may involve changes to the method of working or sequence of working either to improve efficiency or in response to delay events.  The Management Programme allows representation of the corrective action, the analysis of the consequences of the actions on the timing and duration of activities, and revision of the model to update the prediction of how the works are required to progress to achieve the specified completion date.

To be effective, the Management Programme needs to be based on up-to-date progress, represent an accurate prediction of future events as well as accurately model the time characteristics of the project by Logic Links.  The requirements in this respect are the same as described for the Prediction Programme.  The additional mathematical dimension is required of a Management Programme to allow the criticality of activities and float trends to be assessed and allow management decisions to be made based on priorities.  The aim is to identify the corrective actions that needs to be taken at the time of analysis by realistically predicting the future effects of a selection of actions.  A Critical Path Network Analysis will usually be required.

The Critical Path Analysis for the "Equipment Project" is shown to the left.  The supply contract for the equipment which involves the activities of "Procure Supplier", "Design Equipment", Fabrication" and "Delivery of Equipment" are shown as not being critical ti the planned completion date for the project.  These activities have "float".  If any of the activities are delayed or the durations are longer than planned, then this will have no time effect on the planned completion, provided the overall delay and increased duration is less than the float.  the site work however is critical so any delay or increased duration in that case will delay planned completion.  The management effort at the commencement of the project will therefore will be concentrated on the site activities in order to meet the planned programme.

The Critical Path Network Analysis to the left is an up date of the initial programme for the "Equipment Project" but now incorporating an update of progress on the supply contract at a Report Date 2.5. 

The procurement is shown as having been delayed initially from the planned start or more strictly the earliest date on which procurement could have started.  There is no overall effect on the planned completion date since the initial delay is less than available float.  All that has happened is that the contractor has used part of available float.  In practice float is an essential requirement of a Management Programme.  Management resources are limited, so giving priority to critical or near critical activities is only possible without affecting planned completion if lack of action on other activities can be accommodated by available float.  In the "Equipment Project" the priority has been the site activities with the result that the placing of the order for the supply contract was delayed but well within the available float. 

The Critical Path Network Analysis to the left is a further update of the programme for the "Equipment Project" but now incorporating an update of progress on the site work at the same Report Date 2.5.

The update shows that piling was in fact faster than planned.  Since the installation of piles is an activity which is on the critical path, the effect of shorter duration is to allow an earlier completion date than planned as shown on the programme.  The "benefit" to the project of the reduced duration depends on the incidence of the critical path following update of the programme.  In this case the effect of the shorter duration did not change the critical path, but in many cases it will.  the network analysis will allow this change in the critical path to be identified.  

If the contractor wishes to take advantage of the possible earlier completion and the cost benefits, then in practice both the supply contract and the site works in the "Equipment Project" will need to be given equal priority at Report date 2.5.  Although the supply contract is shown as having some float it is in fact "nearly critical".

The effect of the reduced duration of piling has been to allow the contractor to commence the follow-on activities of "formation" and "floor slab" earlier than planned if he wishes take advantage of the possible earlier completion.  This may not be realistic if there is a construction restraint not shown on the programme, but assumed, which is not be within the contractors control.  The assumption is that the design information will be available in sufficient time to allow the early start.  If the information is to be provided by third parties, whether subcontracted consultants or the Employer, the contractor may not be able to require or rely on supply of the information to suit his revised programme.  This applies equally to the supply of the Equipment under the supply contract.  Even if the supplier of the equipment is late in delivery, there may be little the contractor can do in practice except rely on compensation under the supply contract and the obligation to progress the supply.  It is an important aspect of Management Programmes that they should identify the activities by others and that the contract obligations of others is measured by reference to actual progress and the updated main programme.  This is difficult to achieve in practice without a consistent project approach to the use of the Management Programme on the project.

Function 5 Compensation Programme

The fifth possible function of the programme is as a Compensation Programme to establish a contractual entitlement and its measure, or to establish the circumstances necessary for the exercise of certain rights.  The particular entitlement or right (the compensation) needs to be identified in order to ascertain the exact role of the programme and include:

  • The contractor's entitlement to additional time for completion of the works as a whole or for sections of the works, in accordance with the rights stated in the Contract.

  • The contractor's entitlement to additional payment for delay and/or disruption, in accordance with the rights stated in the Contract and/or for breach of contract by the Purchaser.

  • The contractor's entitlement to additional payment for instructed acceleration, in accordance with the rights stated in the Contract and/or on the terms agreed.

  • The right of the Purchaser to deduct liquidated damages for Contractor's failure to comply with the obligation to Complete the Works.

  • The right of the Purchaser to instruct the Contractor to accelerate due to the Contractor's failure to comply with the obligation to progress the works,

  • The right of the Purchaser to terminate the Contractor's employment for the Contractor's failure to comply with the obligation to progress the works. 

Establishing the contractual entitlements and the rights requires the comparison of baseline and actual progress, as well as compliance with any contractual pre-conditions.  

In the case of the obligation to complete by a specified date, this only requires the date of actual completion to be compared with the specified date, to establish whether the obligation has been discharged.  Even this conceptually most simple obligation requires interpretation of the meaning of "completion" in the contract and evidence of when "completion" actually occurred.  If the date for completion is not specified in the contract, then evidence will be required to determine the reasonable time for completion which will depend upon all the circumstances (see Contractors Obligation to Complete the Works).

In the case of the obligation to progress the works, this requires the actual progress measured in terms of both time and resources to be compared to the standard of progress specified in the contract.  The obligation is most difficult to monitor and analyse.  It requires the standard required to be determined by interpretation of the contract.  Inevitably the obligation is specified in most general terms (see Contractors Obligation to Progress the Works).  A programme can provide evidence of necessary facts, either as evidence of fact or opinion, of both the reasonable standard of progress and the actual progress achieved for comparison as follows:

  • The planned programme, whether prepared at tender, at commencement of the works or revised during construction provides evidence of the opinion of the contractor as to the productivity and the durations which were economically achievable in the circumstances known at the date of preparation of the programme,

  • The revised programme provides a record of the actions taken by the contractor as a reaction to events or circumstances,

  • If the planned programme has been accepted by the Contract Administrator, then depending on the terms of the contract, the planned programme may be evidence of the opinion of the Contract Administrator that the planned durations and/or productivity were reasonable, or that the actions by the contractor shown by the revised programme were a reasonable reaction to events or circumstances.

The cogency of the evidence provided by the planned programme will depend upon the accuracy of the available information and the effort applied in producing the programme.  Programmes produced at tender will reflect the usually limited time available to contractors to prepare their bid, the liklihood of being awarded the contract and the contractual status of the tender programme.  In most projects the most realistic programme is usually prepared some weeks after award of the contract, when subcontract packages are more clearly defined.  By then inadequacies in the contractor's bid may have become apparent.  Programmes may then include an element of optimism or programmemanship and not state realistically achievable productions or durations.  For all these reasons the assumptions made in any planned programmes must be verified and tested as accurate.

The cogency of the evidence provided by revised programmes and programmes showing actual progress, depends upon the accuracy of the record of dates and events and the providence of the evidence on which they are based.  The programme should refer directly the source of dates and durations.  Programmes show clearly defined start and finishes of activities, but it is usually difficult in practice to define these two dates precisely.  The finish date for the purpose of defining the end of tasks for that activity may not be the same date as the finish required to allow another activity to start.  There may be different finish dates for the same activity for different Logic Links.  To further complicate matters, in practice once an activity has reached a level of completion to allow other activities to commence, the activity may be left for some time before being finished.  If records show the later date of finish and the programme uses logic links based on that date, the programme will be inaccurate and of little evidential value.

The planned programmes and the revisions will be evidence of the steps taken, or the failure to take sufficient steps, by the Contractor to fulfill his obligations as to programme (see Contractors Obligations as to Programme).  The specific obligations vary with the contract, but may include the requirement to revise and update programmes,  to record actual progress and projected future progress and to show the steps to be taken to overcome the delay caused by events.

The evidence provided by the programme of works is not sufficient in itself to justify compensation.  It is necessary to establish

  • The Causative Event:  There must be a liability to compensate for the event, either in contract or at law.

  • Causation:  There must be a causal connection between the compensation and the Causative Event of the type prescribed by the contract and/or at law.

  • Measure of Compensation:  The compensation must follow the rules and principles of valuation prescribed by the contract and/or at law.

Establishing the incidence of liability for a Causative Event requires the event to be identified as a fact and the liability determined by interpretation of the contract terms and/or recognition of the operation of law.  Many Causative Events which change the planned progress of the works, or change actual progress, can be identified without reference to the programme of works.  Ordered Variations, weather conditions, changed ground conditions or defects in either drawings, materials, plant or workmanship are some of the events which may be identified directly.  Other Causative Events are identified from documents, such as notifications to contractors from subcontractors or suppliers.  In some situations however, the events are first identified by their effect on progress.  The late supply of information or plant and the increased quantities of work are some events which may be first identified by comparison of actual progress to planned progress.  In these cases an accurate planned programme of works is essential for early identification.  In some cases the Causative Event identified may itself have been caused by a previous Causative Event.  The delay and loss of productivity caused by winter working for example may have been caused by the delay into winter due to an earlier Causative Event.  This chain of causation, the incidence of secondary Causative Events, will need need to be established by a logic analysis of the inter-relationship of activities and events.  In complex situations a network programme analysis of as-built progress and events will usually be required.

Whether or not the Causative Event has caused the type of loss which is required to be compensated is a matter of analysis of Causation - of cause and effect - which is a mixed question of fact and law

In the case of the right to deduct liquidated damages for the contractor's breach of the obligation to complete by a specified date, usually no complicated analysis of cause and effect is required.  The contractor may however properly rely on the prevention principle to prevent a Purchaser from taking advantage of its own breach, even in the absence of an extension of time (for a recent example see the Article Notices and Liquidated Damages).  It is suggested that this is essentially an issue of causation.  The right to liquidated damages may not arise unless the pre-conditions to that right are fulfilled and this will usually be notice provisions if at all.

In the case of compensation in the form of the right to an extension of time,  the contract will usually prescribe causation, either in terms of the actual delay to the date for completion and/or the estimated future delay and/or the probable future delay.  These provisions will therefore determine the method of analysis that is required.  It is usual in all but the most simple of cases to carry out the analysis using a Network Analysis Programme.  The method of network analysis, whether impact analysis on the planned programme, window or snapshot analysis or collapse method using the as-built programme will depend upon the prescription for causation in the extension of time clause.  For details of these methods refer to the Index of Articles.  The accuracy of any analysis will depend upon the accuracy of the information on which it is based.  For this aspect of programmes see the commentary above on the Prediction Programme.

In the case of compensation in the form payment for delay and/or disruption and/or acceleration, the compensation may be prescribed in terms of costs or rates and may state whether or not overhead and profit are to be part of the compensation.  The prescription may determine the causation rules, whether evidence that actual loss has been caused is required.  The role of the programme is usually to demonstrate the period in which the delay or disruption or acceleration occurred so that a separate analysis can be carried out of the change in resources in the period and hence the compensation.  

Once it has been established that there is a right to compensation, then the same method used to establish causation may determine the Measure of Compensation.  In the case of the right to extension of time, a network analysis will show not only the link between event and change in progress, but also the extent of the change.  Problems of concurrency will usually be resolved by interpretation of the extension of time clause or principles of causation at law.  The standard of proof for the measure of compensation for time may not be the same as the measure for time related financial compensation, a matter of interpretation of the contract.  Frequently, available evidence is not sufficient to establish the precise measure of compensation even in the case of extension of time, but more so in the case of disruption and acceleration compensation.  The contract itself may state the standard to be adopted by terms such as "he ... estimates is fair and reasonable" or "... the delay suffered fairly entitles the Contractor to an extension of time .." or "... such extension of the Time for Completion as may be reasonable".

 

PRACTICE NOTE
The identification of float and the critical path is an essential part of management using programmes.  Usually a Critical Path Network Analysis will be required for any but the simplest project.  Programmes need to be reviewed constantly as the project develops, since assumptions implied in the logic may be shown not to be accurate.  Certain construction restraints may only become apparent as the project develops.

In many cases whilst a network programme allows a rapid analysis of the effect of different events, the compensation will depend not on the result of the network analysis but on an accurate analysis of the legal incidence of liability. The legal analysis frequently appears less sophisticated than the detailed programme analysis, but this may be misleading. The evidential value of the programme depends upon the accuracy of the information on which the programme is based and whether the assumptions inherent in the programme and method used are correct. Frequently programmes are based on the opinion of the author of the programme rather than accurate information or logic.